TLDR:

• Three federal agencies jointly propose modernizing capital rules for banks of all sizes across the U.S.
  
• Largest banks would use one calculation set instead of two to meet risk-based capital requirements.
  
• Smaller banks may see moderate capital requirement reductions tied to traditional lending activities.
  
• All public comments on the three capital framework proposals must be submitted by June 18, 2026.

Regulatory capital framework proposals have been issued by three federal banking agencies for public comment. The Federal Deposit Insurance Corporation, the Federal Reserve Board, and the Office of the Comptroller of the Currency jointly released three proposals.

These aim to modernize capital requirements across banks of all sizes. The goal is to better align regulatory capital with risk. Capital levels are expected to modestly decrease but remain well above pre-financial crisis standards.

Largest Banks Face Enhanced Risk-Sensitivity Rules

The first proposal primarily targets the largest, most internationally active banks in the country. It would require these institutions to use one set of calculations instead of two.

This streamlines how banks determine compliance with risk-based capital requirements. The framework would also improve calibration across credit, market, and operational risks.

Under the proposal, market risk rules would apply only to banks with significant trading activity. All other banks would retain the option to voluntarily adopt this approach.

This change aims to reduce burden while improving consistency across banking institutions. Risk sensitivity across the regulatory capital framework would be enhanced as a result.

In a joint release, the FDIC, Federal Reserve, and OCC confirmed that the proposals are designed to benefit institutions of every size.

As stated in their joint release, the agencies are seeking to “modernize the regulatory capital framework for banks of all sizes.”

The statement reflects a broad effort to bring the framework in line with current market conditions. Public comment is being actively encouraged ahead of the June 18, 2026 deadline.

The agencies noted that a decade of experience revealed room for improvement in the current framework. Certain elements could be updated without reducing the safety and soundness of the system.

After the 2008 global financial crisis, regulators substantially increased loss-absorbing capital requirements. Stress testing requirements for large banks were also introduced during that period.

Smaller Banks and Systemic Risk Measurements Under Review

The second proposal applies broadly to all but the largest banking institutions in the system. It would better align capital requirements for traditional lending activities with actual risk.

Modifications to mortgage servicing capital requirements are also part of this proposal. These changes would extend to banks operating under the community bank leverage ratio framework.

Additionally, certain large banks would be required to reflect unrealized gains and losses on securities. This would directly affect their reported regulatory capital levels, subject to a transition period.

The adjustment aims to provide a more accurate picture of a bank’s financial position. Disincentives connected to mortgage origination would also be reduced under this framework.

The agencies further clarified the expected outcome of the combined proposals in their joint statement. They noted that the measures “would modestly reduce capital for large banks and moderately reduce requirements for smaller banks.”

This reflects the more traditional lending activities that community and regional banks typically carry. The reduction is calibrated to align requirements more closely with actual lending risk profiles.

The third proposal, issued solely by the Federal Reserve Board, addresses how systemic risk is measured. It would refine the additional capital requirement for the largest and most complex institutions.

The method for calculating systemic risk buffers would be updated accordingly. Altogether, capital levels across the system would still remain substantially higher than pre-crisis levels.